To: Nancy Morris, Secretary, US Securities and Exchange Commission
From: Linda Pei, President, FEMMX Financial - Investment Advisor to Women's Equity Fund
Date: Aug 27, 2007
I am writing to comment on File Number S7-16-07, the release proposing amendments to the Rules under the Securities and Exchange Act of 1934 concerning shareholder proposals and electronic shareholder communications. This Release addresses access to the proxy for the nomination of directors as well as shareholder proposals. It is on the shareholde proposals that I wish to comment that as an investor who takes our responsibility to be engaged and informed, we feel strongly that the SEC's suggested proposals to eliminate or curtail the shareholder resolution process should not be adopted.
As investment advisor to Women's Equity Fund, an open-end mutual fund, we have been involved in the co-sponsorship of shareowner proposals and we conscientiously vote our proxies. We consider the proxy process to be a vitally important tool in communicating with the Board, management and other investors on key issues such as climate change, workforce diversity, executive compensation, glass ceiling, and human rights in overseas factories and governance reforms.
There is a long history of positive results from shareholder resolutions, demonstrated by companies making specific reforms, changing policies and increasing transparency. Annually, approximately one-quarter to one-third of resolutions are withdrawn because constructive dialogue with companies results in win-win agreements.
The rising support votes for shareholder resolutions across a range of environmental, social and governance topics is evidence of the mounting importance of shareholder resolutions to the general investing public.
"Should the Commission adopt a rpvision to enable companies to follow an electronic petition model for non-binding shareholder proposals in lieu of 14a-8?" We strongly oppose this proposed change. To substitute a chat room or other form of electronic petition for the current proxy process erodes significantly a valuable fiduciary responsibility. Chat rooms and electronic forums are welcome approaches for enhancing communications with investors, but not at the expense of a shareholder's right to file resolutions.
The Commission also asks for comments on increasing the votes required for resubmitting shareholder resolution to 10% after the first year, 15% after yar two, and 20% thereafter, compared to current thresholds of 3%, 6%, and 10% respectively. Raising the thresholders as proposed would make it much more difficult for investors to resubmit proposals for a vote, thus further insulating management from shareholder opinion. Over the last 40 years, many proxy topics initially received modest levels of support, only to garner increased support over time as shareowner awareness and knowledge increased. Adding more restrictive thresholds on resubmitting resolutions simply makes it harder for investors seeking consructive engaement with companies. We oppose changes in the resubmission thresholds.
We urge the SEC to uphold the right of investors to sponsor resolutions for a vogte at stockholder meetings. The proposals described above are contrary to constructive investor-management relations.
Women's Equity Fund